<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

          [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the quarterly period ended March 31, 2000

                                       Or

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES Exchange Act of 1934 for the transition period from _____
          to _____.

                         Commission File Number: 0-22401

                              BIONX IMPLANTS, INC.
             (Exact name of registrant as specified in its charter)

       Pennsylvania                                    22-3198032
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                     Identification No.)

                            1777 Sentry Parkway West
                             Gwynedd Hall, Suite 400
                          Blue Bell, Pennsylvania 19422
           (Address of principal executive office, including zip code)

                                  215-643-5000
              (Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last
report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                                   Yes X     No___

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

At May 10, 2000, there were 10,759,442 shares of Common Stock, par value $.0019
per share, outstanding.




<PAGE>   2


                      BIONX IMPLANTS, INC. AND SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                                          Page
<S>                                                                                    <C>
Part I.  Financial Information

Item 1.   Consolidated Financial Statements

             Consolidated Balance Sheets at December 31, 1999
                      and March 31, 2000 (Unaudited)                                       3

             Consolidated Statements of Operations for the Three
                      Months Ended March 31, 1999 and 2000 (Unaudited)                     4

             Consolidated Statements of Cash Flows for the Three
                      Months Ended March 31, 1999 and 2000 (Unaudited)                     5

             Notes to Consolidated Financial Statements (Unaudited)                        6

Item 2.       Management's Discussion and Analysis of Financial                            7
                  Condition and Results of Operations

Item 3.       Quantitative and Qualitative Disclosures about Market Risk                  10

Part II.             Other Information

Item 6.       Exhibits and Reports on Form 8-K                                            10

Signatures                                                                                11
</TABLE>






<PAGE>   3

                      BIONX IMPLANTS, INC AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      DECEMBER 31, 1999 AND MARCH 31, 2000
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                                                   (UNAUDITED)
                                                                   DECEMBER 31,      MARCH 31,
                                                                      1999             2000
                                                                      ----             ----
<S>                                                                <C>              <C>
ASSETS
Current assets:
          Cash and cash equivalents ........................       $   3,186        $   7,429
          Inventory, net (note 2) ..........................           7,774            7,331
          Trade accounts receivable, net of allowance of
               $441 and $412 as of December 31, 1999
               and March 31, 2000, respectively ............           3,540            3,251
          Grants receivable ................................             137              162
          Related party receivable .........................             321              316
          Prepaid expenses and other current assets, net of
          allowance of $223 and ............................             914              301
          Deferred tax asset ...............................             798              798
                                                                   ---------        ---------
Total current assets .......................................          16,669           19,587
Investments ................................................              87               87
Plant and equipment, net ...................................           2,723            2,567
Goodwill and intangibles, net ..............................           3,942            3,913
                                                                   ---------        ---------
Total assets ...............................................       $  23,421        $  26,155
                                                                   =========        =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
          Trade accounts payable ...........................       $   2,940        $   2,013
          Accrued and other current liabilities ............           2,173            2,074
                                                                   ---------        ---------
Total current liabilities ..................................           5,113            4,087

Long-term debt ............................................              33              215
Deferred tax liability .....................................             281              281
                                                                   ---------        ---------
Total liabilities ..........................................           5,427            4,582

Stockholders' equity
      Preferred stock, par value $0.001 per share,
           8,000,000 shares authorized,
           None issued and outstanding .....................              --               --

     Common stock, par value $0.0019 per share,
          31,600,000 shares authorized, 10,785,951 shares
          issued and outstanding as of December 31, 1999 and
          March 31, 2000, respectively .....................              17               20

     Treasury stock, 26,500 shares .........................            (162)            (162)
     Additional paid-in capital ...........................           35,892           39,843
     Accumulated deficit ...................................         (16,729)         (17,105)
     Accumulated other comprehensive income ................          (1,025)          (1,025)
                                                                   ---------         --------
Total stockholders' equity .................................          17,994           21,572
                                                                   ---------         --------
Total liabilities and stockholders' equity .................       $  23,421         $ 26,155
                                                                   =========         ========
</TABLE>



    See accompanying notes to the unaudited consolidated financial statements


<PAGE>   4

                      BIONX IMPLANTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                                March 31,
                                                         1999             2000
<S>                                                    <C>              <C>
Revenues:
Product sales                                          $ 5,107          $ 4,971
License and grant revenues                                 177              105
                                                       -------          -------
     Total revenues                                      5,284            5,076

Cost of goods sold                                       1,348            1,721
                                                       -------          -------
Gross profit                                             3,936            3,355

Selling, general and administrative                      3,951            2,930
Research and development                                   750              607
Patent litigation expense                                  385              200
                                                       -------          -------
Total operating expenses                                 5,086            3,737

Operating loss                                          (1,150)            (382)

Other income                                               285                6
                                                       -------          -------
Loss before provision for income taxes                    (865)            (376)

Provision for income taxes                                  --               --
                                                       -------          -------
Net loss                                                  (865)            (376)
                                                       =======          =======
Loss per share:
     Basic                                               (0.10)           (0.04)
     Diluted                                             (0.10)           (0.04)

Shares used in computing Loss per share:
     Basic                                               8,899            9,666
     Diluted                                             8,899            9,666
</TABLE>


   See accompanying notes to the unaudited consolidated financial statements.


                                       -4-


<PAGE>   5

                      BIONX IMPLANTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                             March 31,
                                                                      1999             2000

<S>                                                                   <C>             <C>
Cash flows from operating activities:

Net loss                                                              ($865)          ($376)

Adjustments to reconcile net loss to
net cash (used in) provided by operating
activities:
Depreciation and amortization                                           152             213
Consignment amortization                                                302             424

(Increase) decrease in inventory, net                                (1,630)             19
Decrease in accounts receivable, net                                    370             289
(Increase) in grant receivable                                         (301)            (25)
(Increase) decrease in related parties                                  (13)              4
Decrease in prepaid expenses and other current assets                   323             613
(Decrease) in trade accounts payable                                 (1,984)           (927)
(Decrease) in current tax liability                                    (107)             --
Increase (decrease) in accrued and other current liabilities             39             (99)
                                                                   --------        --------
                                                                     (2,849)            511
                                                                   --------        --------

Net cash provided by (used in) operating activities                  (3,714)            135


Cash flows from investing activities:
              Purchases of plant and equipment                         (748)            (33)
              Purchases of computer software and intangibles           (378)              5
                                                                   --------        --------


Net cash used in investing activities                                (1,126)            (28)

Cash flows from financing activities:
              (Repayment) increase in of long-term debt                 (39)            181
              Rights offering, net                                       --           3,954
              Purchase of treasury shares                               (34)             --
                                                                   --------        --------

Net cash provided by (used in) financing activities                     (73)          4,135
                                                                   --------        --------

Net increase (decrease) in cash and cash equivalents                 (4,913)          4,243
Cash and cash equivalents at beginning of period                     14,213           3,186
                                                                   --------        --------
Cash and cash equivalents at end of period                         $  9,300        $  7,429
                                                                   ========        ========

Supplemental disclosure of cash flow information:
Cash paid for interest                                                   --              --
                                                                   ========        ========
Cash paid for taxes                                                $    155              --
                                                                   ========        ========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       -5-


<PAGE>   6


                      BIONX IMPLANTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.   Basis of Presentation

The accompanying financial statements have been prepared by Bionx Implants, Inc.
(the "Company") and are unaudited. In the opinion of the Company's management,
all adjustments (consisting solely of normal recurring adjustments) necessary to
present fairly the Company's consolidated financial position as of December 31,
1999 and March 31, 2000 and the Company's consolidated results of operations and
cash flows for the three months ended March 31, 1999 and 2000, have been made.
Certain information and footnote disclosures required under generally accepted
accounting principles have been condensed or omitted from the consolidated
financial statements and notes thereto presented herein pursuant to the rules
and regulations of the SEC. The consolidated financial statements and notes
thereto presented herein should be read in conjunction with the Company's
audited consolidated financial statements for the year ended December 31, 1999
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999 filed with the SEC. The results of operations and
the cash flows for the three months ended March 31, 2000 are not necessarily
indicative of the results to be expected for any other interim period or the
entire fiscal year.



2.   Inventory

     Inventory consists of the following components as of December 31, 1999 and
March 31, 2000 (in thousands):

<TABLE>
<CAPTION>
                                                                 December 31, 1999            March 31, 2000

<S>                                                              <C>                          <C>
Raw materials                                                         $   1,121                     $1,265
Finished goods - Implants                                                 2,844                      3,089
Instruments                                                               4,505                      3,819
Instruments on consignment                                                3,100                      2,967
                                                                      ---------                     ------
                                                                         11,570                     11,140
       Less:
             Inventory reserve for obsolete and excess
                  instruments and implants                               (2,701)                    (2,289)
             Accumulated amortization
              - consigned instruments                                    (1,095)                    (1,520)
                                                                      ---------                     ------
                                                                        $ 7,774                     $7,331
                                                                      =========                     ======

</TABLE>

The Company amortizes the cost of instrumentation inventory consigned to dealers
and distributors.

In the fourth quarter of 1999, the Company changed its accounting estimate for
instruments consigned to hospitals. Since the Company cannot control future
purchases from such hospitals and it is cost prohibitive to return the
instruments, the Company began expensing the instruments on the initial sale to
the hospital. In accordance with APB Opinion 20, the Company wrote off $4.0
million of hospital gross inventory and added back an associated $1.6 million of
accumulated amortization, for a net $2.45 million write off.

Additionally, in the fourth quarter of 1999, the Company identified certain
distributor accounts that had been terminated by the Company and had outstanding
inventory balances. The Company wrote off $382 of gross implant inventory and
$886 of gross instruments that had been placed with these distributors, and used
as samples, because it is cost prohibitive to pursue such accounts and retrieve
the products.

In the second quarter of 1999, the Company recorded a charge of $929 for excess
implant and instrument inventory due to changes in technology and the
introduction of new and competing instruments. This charge was increased by
$1,594 in the fourth quarter of 1999 as these continued changes in technology
created excess inventory.

In aggregate, the foregoing charges resulted in a Special Charge of $6.241
million during 1999.

3.   Net Loss Per Share

Basic losses per share are computed using the weighted average number of shares
of common stock outstanding during the period. Diluted losses per share are
computed using the weighted average number of common and dilutive potential
common shares outstanding during the period. Potential common shares consist of
stock options and warrants using the treasury stock method. These options and
warrants have been excluded from the dilutive losses per share calculation as
their effect would be antidilutive at March 31, 1999 and 2000.


<PAGE>   7



The following table sets forth the calculation of the total number of shares
used in the computation of net loss per common share for the three months ended
March 31, 1999 and 2000 (in thousands):


<TABLE>
<CAPTION>
                                                          1999                 2000
                                                         -----                 -----
<S>                                                      <C>                   <C>
Shares used in computing basic                           8,899                 9,666
Loss per share

Incremental shares from assumed                             --                    --
Exercise of dilutive options and
Warrants

Shares used in computing diluted                         8,899                 9,666
Loss per share                                           -----                 -----
</TABLE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Business

Statements regarding future performance in this Quarterly Report on Form 10-Q
constitute forward-looking statements under the Private Securities Litigation
Reform Act of 1995 ("Forward looking Statements"). The Company's actual results
could differ materially from those anticipated by such forward-looking
statements as a result of certain factors, including those set forth in Exhibit
99.1 to the Company's Annual Report on Form 10-K for the year ended December 31,
1999.

The Company was founded in 1984 to develop certain resorbable polymers for
orthopaedic uses. The Company has incurred substantial operating losses since
its inception and, as of March 31, 2000, had an accumulated deficit of
approximately $17.1 million. Such losses have resulted to a large extent from
expenses associated with the write off and reserve of impaired inventory, the
development and patenting of the Company's Self-Reinforcing technologies and
resorbable implant designs, preclinical and clinical studies, preparation of
submissions to the FDA and foreign regulatory agencies, the development of
sales, marketing and distribution channels, the write-off of acquired in-process
research and development and the development of the Company's manufacturing
capabilities. After recording profitable results for a number of quarters, the
Company has again recorded losses in recent periods, including a loss of
approximately $12.5 million in 1999 and $.4 million for the quarter ended March
31, 2000. Although the Company's revenues grew significantly in the second half
of 1996 and during 1997 and 1998, there was no revenue growth during 1999. No
assurance can be given that revenues will grow in the future or that revenues
will exceed expenses. There can be no assurance that the Company will be able to
successfully commercialize its products or that the Company will be profitable
again.

In late 1998, the Company entered into an expansion phase building inventory
levels and personnel in anticipation of continued growth in its core business
and the introduction of new products in the Craniofacial surgical market. Actual
sales results were substantially less than planned; thus these increased
expenditures, together with legal costs incurred to protect the Company's
intellectual property and a 1% year over year (1999 vs. 1998) reduction in sales
resulted in operating losses during 1999 of approximately $13.1 million.

The Company incurred losses of $865,000 and $3,560,000 in the first and second
quarters of 1999. During the second quarter of 1999, the Company began to
implement initiatives to refocus its business and reallocate critical resources
with a goal of achieving sales growth, profit improvement and a positive cash
flow position. Management initiatives included: development and implementation
of a management-restructuring plan that included adding critical resources in
areas that will have the greatest impact on sales growth and profit improvement;
consolidation of sales efforts for craniofacial and orthopedic products designed
to improve sales efficiencies, increase market coverage and reduce the Company's
cost of sales; reduction in sales administration to reduce the Company's overall
selling costs; refocus of R&D investments on new product introductions that will
provide complementary product offerings for orthopedic and craniofacial
products; consolidation of global inventories to reduce the Company's overall
investment in inventories and improve customer service levels; reduction in
inventory levels to improve inventory turn rates thereby reducing the Company's
cash requirements to support inventory investments; increases in sales and
marketing efforts designed to expand sales contributions from markets outside of
the US; and the implementation of surgeon educational programs designed to
increase surgeon awareness and use of the Company's products. In addition to
these initiatives, during the second quarter of 1999, four new patents were
issued for the application of the Company's technology for orthopedic
indications.

During the third and fourth quarters of 1999, the Company continued to implement
these initiatives and refocus its business in an attempt to improve its
profitability and operations performance. Four new products were introduced. The
loss from operations excluding the special inventory charges increased reserves
and litigation costs; has been reduced from $2,028,000 in the second quarter
1999 to $699,000 in the third quarter and $335,000 in the fourth quarter at
December 31, 1999. The Company's cash and cash equivalents improved from $2.9
million at September 30, 1999 to $3.2 million at December 31, 1999,
representing the improvements made in cash flow management and our continued
efforts to achieve a positive cash flow.

No assurances can be given that the Company's initiatives will result in
profitable operations in the future.

The Company first introduced its PGA pins in 1984 and its PGA screws in 1986. In
1987, the Company introduced its first PLLA products, PLLA pins. PLLA screws
were introduced in 1989. Since the introduction of these products, the Company
has expanded its PGA and PLLA pin and screw product lines to address additional
clinical indications. The Company's PGA membrane product was introduced in 1992,
and, in 1995, the Company launched its Meniscus Arrow, PLLA tacks, and PGA and
PLLA urology stents. In 1998, the Company launched its cranio-facial product

<PAGE>   8

line. Prior to 1996, the Company derived substantially all of its revenue from
sales of its PLLA and PGA screws and pins. A substantial portion of the
Company's revenues and revenue growth in the second half of 1996 and during 1997
and 1998 resulted from sales of the Meniscus Arrow, which received FDA clearance
in March 1996. To date, all products sold by the Company have been launched
first in international markets. During 1997, 1998, 1999, and the first quarter
of 2000. International product sales represented approximately 15%, 20%, 18%,
and 17%, respectively, of the Company's total product sales.

The Company typically sells, consigns or provides free of charge to hospitals
implant grade, stainless steel surgical instruments for use with each of its
Self-Reinforced, resorbable products. The sale of these instruments result in
margins which are typically lower than the margins applicable to the Company's
implant products. For financial statement purposes, revenues from the sale of
instrumentation systems are included within product sales and costs associated
with such systems are included within cost of goods sold. However, due to
increased competitive activity in the hospital setting, the Company began
expensing instruments during the fourth quarter 1999 as they are placed in
hospitals for use by the surgeon. In the case of consigned product to
distributors and dealers, the Company amortizes the cost of the instrumentation
over a three to four year period as cost of goods sold. Sales and loans of such
systems are likely to be most pronounced in periods shortly after product
launches and likely to be less prevalent as penetration of the market increases
over the long term.

The Company sells its products through managed networks of direct sales agents,
independent sales agents, distributors and dealers. In the U.S., the Company
handles all invoicing functions directly and pays commissions to its sales
agents or representatives. Outside the U.S., the Company sells its products
directly to distributors and dealers at discounts that vary by product and by
market. Accordingly, the Company's U.S. sales result in higher gross margins
than international sales.

Outside of the orthopaedic market, the Company may seek to establish licensing
or distribution agreements with strategic partners to develop certain products
and to market and distribute products that the Company elects not to distribute
through its managed networks of independent sales agents, distributors and
dealers. No assurance can be given that the Company will be able to enter into
license arrangements on satisfactory terms.

The Company has entered into agreements pursuant to which the Company is
obligated to pay royalties based on net sales of certain of the Company's
products, including the Meniscus Arrow. To the extent that sales of the Meniscus
Arrow products and other licensed products increase in future periods; the
Company's license obligations are expected to increase.

The Company invoices more than 85% of its consolidated revenues in US Dollars.
Approximately 72% of the expenses incurred by the Company are denominated in US
Dollars. The remaining portion of revenues and expenses are denominated in
European currencies, predominantly Finnish Markka. The Company seeks to manage
its foreign currency risk for these other currencies through the purchase of
foreign currency options and forward contracts. No assurances can be given that
such hedging techniques will protect the Company from exposure resulting from
relative changes in the economic strength of the foreign currencies applicable
to the Company. Foreign exchange transaction gains and losses can vary
significantly from period to period.

In April 1999, the Company entered into a distribution agreement with Mentor
Corporation. Under the terms of the agreement, Mentor has exclusive distribution
rights for all of the Company's current and future bioabsorbable stent products
for urology applications in all areas of the world other than the U.S. and
Japan. In exchange for exclusive distribution rights, Mentor must achieve
certain minimum market penetration objectives, and pay the Company a pre-agreed
percentage of the customer sales price on all stent products sold. During
December 1999, the Company renegotiated the agreement with Mentor to include the
exclusive distribution rights for the U.S. In exchange for the U.S. distribution
rights, Mentor will pay all costs and expenses associated with development,
clinical and registration costs of current and future stents for urology
applications on a global basis, excluding Japan. The Company also entered into
an agreement with Toray, a Japanese company, for the exclusive distribution
rights for stent products in Japan. Toray will pay all costs and expenses
associated with development, clinical and registration costs of current and
future stents for urology applications in Japan.

While the Company's operating losses have resulted in net operating loss
carryforwards of approximately $8.5 million for Federal, foreign and state
income tax reporting purposes as of December 31, 1999, the extent to which such
carryforwards are available to offset future U.S. and Finnish taxable income may
be limited as a result of various ownership changes that have occurred in recent
years. Additionally, because tax laws limit the time during which these
carryforwards may be applied against future taxes, the Company may not be able
to take full advantage of these carryforwards for income tax purposes.
Furthermore, income earned by a foreign subsidiary may not be offset against
operating losses of U.S. entities. The statutory tax rates applicable to the
Company and its foreign subsidiaries vary substantially. Tax rates have
fluctuated in the past and may do so in the future.

The Company's results of operations have fluctuated in the past on an annual and
quarterly basis and may fluctuate significantly from period to period in the
future, depending on many factors, many of which are outside of the Company's
control. Such factors include the timing of government approvals, the medical
community's acceptance of the Company's products, the success of competitive
products, the ability of the Company to enter into strategic alliances with
corporate partners, expenses associated with patent matters, the results of
regulatory inspections and the timing of expenses related to product launches.


Results of Operations

Product sales. The Company's product sales decreased by 3% from $5.1 million
during the quarter ended March 31, 1999 to $5.0 million during the quarter ended
March 31, 2000. Consolidated revenues for the Company are comprised of three
specific product categories: Sports Medicine (which includes the Meniscus
Arrow), Orthopedic Trauma and Craniofacial.

Consolidated sales of Sport Medicine products during the first quarter of 2000
were $3.3 million, down from $3.4 million in the first quarter of 1999, a 3%
decrease. The Company believes that the reduction of sales of Sport Medicine
products reflects the effect of competition and may reflect lower unit usage of
Company products in particular medical procedures.

<PAGE>   9


Consolidated sales of Orthopedic Trauma products during the first quarter of
2000 were $1.1 million, up from the $911 in the first quarter of 1999, a 22%
increase.

Consolidated sales of Craniofacial products during the first quarter of 2000
were $354, down from $445 in the first quarter of 1999, a 20% decrease that is
largely due to reduced market coverage. The Company commenced sales of
Craniofacial products in May 1998.

Grant and License revenues. Grant and license revenues totaled $105 for the
three months ended March 31, 2000, compared with revenue of $177 recorded during
the three-month period ended March 31, 1999. This revenue is generated primarily
from grants obtained from a Finnish government research organization which funds
certain research and development projects.

Gross profit. The Company's gross profit decreased from $3.9 million during the
first quarter of 1999 to $3.4 million during the first quarter of 2000,
primarily due to increased labor costs.

Selling, general and administrative expenses decreased by 26% from $3.9 million
in the first quarter of 1999 to $2.9 million in the first quarter of 2000. Such
expenses were 77% and 59% of product sales for the first quarter of 1999 and
2000, respectively. During the first quarter of 1999, the Company paid salaries
to newly employed sales persons (associated primarily with the launch of the
craniofacial products), increased its commission payment obligations reflecting
the Company's increased product sales in the U.S. and increased expenses
associated with establishing and supporting a managed network of independent
sales agents in the U.S. During the second quarter of 1999, the Company began to
implement initiatives to refocus its business and reallocate critical resources
with a goal of achieving sales growth, profit improvement and a positive cash
flow position. The reduction in selling, general and administrative costs is
attributable to a reduction of the cost for sales representatives in the U.S.
market, reduction in the commission rate and payments to distributors,
consolidation of sales efforts for craniofacial and orthopedic products designed
to improve sales efficiencies, increase market coverage and reduce the Company's
cost of sales, and reduction in sales administration to reduce the Company's
overall selling costs offset by the implementation of surgeon educational
programs designed to increase surgeon awareness and use of the Company's
products and development and implementation of a management-restructuring plan
that included adding critical resources in areas that will have the greatest
impact on sales growth and profit improvement

Patent and legal / litigation expense. Patent and legal / litigation expense
decreased 48% from $385 in the first quarter of 1999 to $200 in the first
quarter of 2000 because the current status of the proceedings and negotiations
does not require the legal assistance that was previously required when these
matters were first initiated.

Research and development. Research and development expenses totaled $607 or 12%
of sales for the first quarter of 2000, down from $750 or 14% of sales for the
same period of 1999. The decrease in research and development expense are a
result of the discontinuation of external research activities that have not
proven beneficial to the Company.

Other income and expense. In the first quarter of 2000, the Company generated
interest income of approximately $45.

Income taxes. The Company recorded no tax provision for the first quarters of
1999 and 2000, due to operating losses for both periods.

Net loss. The Company reported a net loss of ($376) or ($.04) per share (basic
and diluted) for the first quarter of 2000, as compared with net loss of ($865)
or ($.10) per share (basic and diluted) for the first quarter of 1999.

Liquidity and Capital Resources

The Company has relied primarily upon external (private and public) sources of
equity to fund operations and development.

At December 31, 1999 and March 31, 2000, cash and cash equivalents totaled $3.2
million and $7.4 million, respectively. The increase in cash and cash
equivalents of approximately $4.2 million is primarily attributable to the
Company's Rights Offering of approximately $3.9 million and also includes $135
net cash provided by operating activities.

At December 31, 1999 and March 31, 2000, the Company had net working capital
totaling $11.6 million and $15.5 million, respectively.

The Company's liquidity has been strengthened substantially during the first
quarter of 2000. The net increase in cash and investment of $4.2 million during
this period, as compared to a $4.9 million decline during the first quarter of
1999, reflects management initiatives discussed under the heading selling,
general and administration expenses above, the refocus of research and
development investments on new products introductions, the consolidation of
total inventories, proceeds from the rights offering and general management
expense allocations to areas that improve underlying business processes.

         The Company's liquidity is dependent primarily upon its ability to
improve operating results and thereby generate adequate cash flow from
operations. Management has taken several steps designed to improve future
financial results and reduce the amount of cash used by operations, including
(i) developing a management restructuring plan to add critical resources to
areas having the greatest impact in sales growth, (ii) consolidating sales
efforts to improve sales efficiencies, increase market coverage and reduce
selling costs, (iii) refocusing research and development investments on new
product introductions, (iv) consolidating and reducing inventory levels, (v)
increasing sales and marketing efforts outside the U.S., and (vi) where
possible, reducing other operating expenses. However, there can be no assurance
that these steps will be successful. The Company's operations may not provide
sufficient internally generated cash flows to meet the Company's projected
requirements. The Company's ability to continue to finance its operations will
depend on its ability to achieve profitability by improving sales and margins,
its ability to reduce cash outflows and, if necessary, its ability to obtain
other sources of funding sufficient to support the Company's operations. No
assurances can be given that such funding will be available on satisfactory
terms or at all.

<PAGE>   10


          On March 3, 2000, the Company completed shareholder rights offering,
pursuant to which it raised, net of expenses, $3,954 and issued 1,586,857 shares
of Common Stock. The Company distributed 0.173 of a subscription right for each
share of Common Stock outstanding on the January 10, 2000 record date for a
total of 1,586,857 shares offered in the rights offering. The subscription price
of $2.55 per share was established by the Board of Directors based on a 15%
discount from the market price on January 14, 2000, at the time the offering was
priced. The Company plans to use the proceeds of the rights offering for
additional working capital to fund operations, for continuing research and
development and for surgeon education programs.

         To the extent that funds generated from the Company's operations,
together with its existing capital resources, and the net interest earned
thereon, are insufficient to meet current or planned operating requirements, the
Company will be required to obtain additional funds through equity or debt
financing, strategic alliances with corporate partners and others, or through
other sources. The terms of any further equity financing may be dilutive to
stockholders and the terms of any debt financing may contain restrictive
covenants, which limit the Company's ability to pursue certain courses of
action. The Company does not have any committed sources of additional financing
beyond that described above, and there can be no assurance that additional
funding, if necessary, will be available on acceptable terms, if at all.
Principal stockholders of the Company who previously provided funding to the
Company and provided guarantees to sources of credit have indicated that they do
not intend to continue furnishing such assistance. If adequate funds are not
available, the Company may be required to delay, scale-back or eliminate certain
aspects of its operations or attempt to obtain funds through arrangements with
strategic partners or others that may require the Company to relinquish rights
to certain of its technologies, product candidates, products or potential
markets. If adequate funds are not available, the Company's business, financial
condition and results of operations could be materially and adversely affected.
The Company's future capital requirements and the adequacy of available capital
resources will depend on numerous factors, including the Company's ability to
successfully perform management initiatives initiated in 1999, market acceptance
of its existing and future products, the successful commercialization of
products in development, progress in its product development efforts, the
magnitude and scope of such efforts, acquisition opportunities, progress with
preclinical studies, clinical trials and product clearances by the FDA and other
agencies, the cost and timing of the Company's efforts to expand its
manufacturing capabilities, the cost of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights, competing
technological and market developments, and the development of strategic
alliances for the marketing of certain of the Company's products. The
sufficiency of the Company's capital reserves with respect to operations beyond
2000 will depend primarily upon the Company's operating results and the extent
to which such results are capable of funding anticipated growth.

         The Company believes that existing capital resources from its $4.0
million discretionary credit line and its $3.9 million rights offering completed
in the first quarter of 2000, together with cash flow from operations (if, and
to the extent, generated), will be sufficient to fund its operations during
2000. This statement constitutes a Forward-Looking Statement. Actual results
could differ materially from the Company's expectations regarding its capital
requirements and its sources of capital. The Company's future capital
requirements and the adequacy of available funds will depend on numerous
factors, including management's ability to reverse recent trends, market
acceptance of the Company's existing and future products, the successful
commercialization of products in development, progress in its product
development efforts, the magnitude and scope of such efforts, progress with
preclinical studies, clinical trials and product clearances by the FDA and other
agencies, the cost and timing of the Company's efforts to expand its
manufacturing capabilities, the cost of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights, competing
technological and market developments, and the development of strategic
alliances for the marketing of certain of its products. The Company's operations
did not produce positive cash flows during 1994, 1995, 1996, 1998 or 1999. To
the extent that funds generated from the Company's operations, together with its
existing capital resources (including its credit facility), and the net interest
earned thereon, are insufficient to meet current or planned operating
requirements, the Company will be required to obtain additional funds through
equity or debt financing, strategic alliances with corporate partners and
others, or through other sources. No assurances can be given that such funds
will be made available to the company on acceptable terms or otherwise.


Item 3.  Quantitative and Qualitative Disclosures about Market Risk

No change since filing of the Company's Annual Report on Form 10-K for the year
ended December 31, 1999.

Part II. Other Information

Item 6. Exhibits and Reports on form 8-K

             (a) The following exhibits are filed as part of this Quarterly
                 Report on form 10-Q:

             No. 27.1 Financial Data Schedule

             (b) The Registrant did not file any Current Reports on Form 8-K
             during the quarter ended March 31, 2000.



<PAGE>   11


                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                              BIONX IMPLANTS, INC.

                                        By:/s/ Gerard Carlozzi

                                           Gerard Carlozzi, President
                                           and Chief Executive Officer

                                        By:/s/ Drew Karazin

                                           Drew Karazin, Chief Financial Officer

Dated:  May 15, 2000


EXHIBIT INDEX

Exhibit

     27.1 Financial Data Schedule